The proposed repeal of taxes that were put in place to fund Obamacare would give America’s top earners the biggest cut.
According to an analysis by the nonpartisan Tax Policy Center, the health care bill introduced by House Republicans last week would give the top 1 percent of earners a cut worth about 2 percent of their after-tax incomes. That shakes out to an average of $37,240 per year. The Tax Policy center defines the top 1 percent of Americans as those making more than $772,000.
The top 0.1 percent of earners, those making $3.9 million or more, would fare even better. They would see their taxes cut by 2.6 percent, or an average $207,390.
The middle 20 percent of earners, who make between $52,600 and $89,400, would see a tax cut of just 0.5 percent — or about $300 a year. The lowest earners, or those in the bottom 20 percent, would receive an average cut of $150, or 0.9 percent.
“The bottom line is that while everyone gets a tax cut, they are more favorable to the rich than those at the bottom,” said Roberton Williams, of the Tax Policy Center.
The tax cuts stem from Republicans’ proposal to repeal several Obamacare taxes, including a 3.8 percent investment tax and a 0.9 percent Medicare payroll tax. Both of those apply to individuals earning $200,000 or more a year and couples earning more than $250,000. Since those taxes are only imposed on the highest earners, it’s not surprising that the wealthy would also be the main beneficiaries of their repeal.
While the Tax Policy Center’s analysis didn’t take into account the broader impacts of the GOP’s proposed Obamacare replacement, such as who would gain or lose health care, Williams said those changes would likely add to the gap between income brackets.
“If anything, looking at the health insurance side as well would make it more regressive,” he said.
Last week, a separate report by the nonpartisan Joint Committee on Taxationfound that repealing the taxes would return about $275 billion to taxpayers over 10 years. More than half of that amount would go to those making $1 million or more, according to the report.